BILL NUMBER: SB 1128	CHAPTERED  10/10/99

	CHAPTER   757
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 7, 1999
	PASSED THE SENATE   SEPTEMBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 3, 1999
	AMENDED IN ASSEMBLY   AUGUST 30, 1999
	AMENDED IN ASSEMBLY   JUNE 22, 1999
	AMENDED IN SENATE   APRIL 5, 1999

INTRODUCED BY   Senator Speier
   (Principal coauthor:  Senator Burton)
   (Principal coauthor:  Assembly Member Shelley)

                        FEBRUARY 26, 1999

   An act to add Section 14105.26 to the Welfare and Institutions
Code, relating to health services.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1128, Speier.  Medi-Cal:  provider reimbursement.
   Existing law provides for the Medi-Cal program, administered by
the State Department of Health Services, under which qualified
low-income persons are provided with health care services.
   The Medi-Cal program provides for a special methodology of
reimbursement of disproportionate share hospitals for the provision
of inpatient hospital services.
   Existing law generally defines a disproportionate share hospital
as a hospital that has disproportionately higher costs, volume, or
services related to the provision of services to Medi-Cal or other
low-income patients than the statewide average.
   Existing law provides for supplemental reimbursement of eligible
disproportionate share providers for funding capital projects.
   This bill would authorize a distinct part of an acute care
hospital providing specified services and meeting certain
requirements to receive, in addition to the rate of payment that the
facility would otherwise receive for skilled nursing services,
supplemental reimbursement for capital projects as provided under the
bill.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 14105.26 is added to the Welfare and
Institutions Code, to read:
   14105.26.  (a) Each eligible facility, as described in paragraph 2
of subdivision (b), may, in addition to the rate of payment that the
facility would otherwise receive for skilled nursing services,
receive supplemental Medi-Cal reimbursement to the extent provided in
this section.
   (b) (1) Projects eligible for supplemental reimbursement shall
include any new capital projects for which final plans have been
submitted to the appropriate review agency after January 1, 2000, and
before July 1, 2001.  For purposes of this section, "capital project"
means the construction, expansion, replacement, remodeling, or
renovation of an eligible facility, including buildings and fixed
equipment.  A "capital project" does not include the provision of
furnishings or of equipment that is not fixed equipment.
   (2) A facility shall be eligible only if the submitting entity had
all of the following additional characteristics during the 1998
calendar year:
   (A) Provided services to Medi-Cal beneficiaries.
   (B) Was a distinct part of an acute care hospital providing
skilled nursing care and supportive care to patients whose primary
need is for the availability of skilled nursing care on an extended
basis.  For the purposes of this section, "acute care hospital" means
the facilities defined in subdivisions (a) or (b), or both, of
Section 1250 of the Health and Safety Code.
   (C) Had not less than 300 licensed skilled nursing beds.
   (D) Had an average skilled nursing Medi-Cal patient census of not
less than 80 percent of the total skilled nursing patient days.
   (E) Was owned by a county or city and county.
   (c) (1) An eligible facility seeking to qualify for supplemental
reimbursement shall submit documentation to the department regarding
debt service on revenue bonds or other financing instruments used for
financing the capital project.
   (2) The department shall confirm in writing project eligibility
under this section.
   (d) (1) Capital projects receiving funding shall include only the
upgrading or construction of buildings and equipment to a level
required by currently accepted medical practice standards, including
projects designed to correct Joint Commission on Accreditation of
Hospitals and Health Systems, fire and life safety, seismic, or other
related regulatory standards.
   (2) Capital projects receiving funding may expand service capacity
as needed to maintain current or reasonably foreseeable necessary
bed capacity to meet the needs of Medi-Cal beneficiaries after giving
consideration to bed capacity needed for other patients, including
unsponsored patients.
   (3) Supplemental reimbursement shall only be made for capital
projects, or for that portion of capital projects that provide
skilled nursing services, and that are available and accessible to
patients eligible for services under this chapter.
   (e) An eligible facility's supplemental reimbursement for a
capital project qualifying pursuant to this section shall be
calculated and paid as follows:
   (1) For any fiscal year for which the facility is eligible to
receive supplemental reimbursement, the facility shall report to the
department the amount of debt service on the revenue bonds or other
financing instruments issued to finance the capital project.
   (2) For each fiscal year in which an eligible facility requests
reimbursement, the department shall establish the ratio of skilled
nursing Medi-Cal days of care provided by the eligible facility to
total skilled nursing patient days of care provided by the eligible
facility.  The ratio shall be established using data obtained from
audits performed by the department, and shall be applied to the
corresponding fiscal year of debt service on the revenue bonds or
other financing instruments issued to finance the capital project.
   (3) The amount of debt service that will be submitted to the
federal Health Care Financing Administration for the purpose of
claiming reimbursement for each fiscal year shall equal the amount
determined annually in paragraph (1) multiplied by the percentage
figure determined in paragraph (2).
   (4) The supplemental reimbursement to an eligible facility shall
be equal to the amount of federal financial participation received as
a result of the claims submitted pursuant to paragraph (2) of
subdivision (j).
   (5) In no instance shall the total amount of supplemental
reimbursement received under this section combined with that received
from all other sources dedicated exclusively to debt service exceed
100 percent of the debt service for the capital project over the life
of the loan, revenue bond, or other financing mechanism.
   (6) A facility qualifying for and receiving supplemental
reimbursement pursuant to this section shall continue to receive
reimbursement until the qualifying loan, revenue bond, or other
financing mechanism is paid off, and as long as the facility meets
the requirements of paragraph (3) of subdivision (d).
   (7) The supplemental Medi-Cal reimbursement provided by this
section shall be distributed under a payment methodology based on
skilled nursing services provided to Medi-Cal patients at the
eligible facility, either on a per diem basis, a per discharge basis,
or any other federally permissible basis.  The department shall seek
approval from the federal Health Care Financing Administration for
the payment methodology to be utilized, and shall not make any
payment pursuant to this section prior to obtaining that approval.
   (8) The supplemental reimbursement provided by this section shall
not commence prior to the date upon which the hospital submits to the
department a copy of the certificate of occupancy for the capital
project.
   (f) (1) It is the Legislature's intent in enacting this section to
provide a funding source for a portion of the construction costs of
eligible facilities without any expenditure from the state General
Fund.
   (2) The state share of the amount of the debt service submitted to
the federal Health Care Financing Administration for purposes of
supplemental reimbursement shall be paid with county-only funds and
certified to the state as provided in subdivision (g).  Any amount of
the costs of the capital project that are not reimbursed by federal
funds shall be borne solely by the eligible facility.
   (3) Prior to receiving any funding through this section, an
eligible facility shall demonstrate its ability to cover all of the
anticipated costs of construction, including those not reimbursed
through federal funding.
   (g) The county or city and county, on behalf of any eligible
facility, shall do all of the following:
   (1) Certify, in conformity with the requirements of Section 433.51
of Title 42 of the Code of Federal Regulations, that the claimed
expenditures for the capital project are eligible for federal
financial participation.
   (2) Provide evidence supporting the certification as specified by
the department.
   (3) Submit data, as specified by the department, to determine the
appropriate amounts to claim as expenditures qualifying for financial
participation.
   (4) Keep, maintain, and have readily retrievable, such records as
specified by the department in order to fully disclose reimbursement
amounts to which the eligible facility is entitled, and any other
records required by the federal Health Care Financing Administration.

   (h) The department may require that any county or city and county
seeking supplemental reimbursement under this section enter into an
interagency agreement with the department for the purpose of
implementing this section.
   (i) All payments received by an eligible facility pursuant to this
section shall be placed in a special account, the funds of which
shall be used exclusively for the payment of expenses related to the
eligible capital project.
   (j) (1) The department shall promptly seek any necessary federal
approvals for the implementation of this section.  If necessary to
obtain federal approval, the department may, for federal purposes,
limit the program to those costs that are allowable expenditures
under Title XIX of the federal Social Security Act (Subchapter 19
(commencing with Section 1396) of Chapter 7 of Title 42 of the United
States Code).  If federal approval is not obtained for
implementation of this section, this section shall become
inoperative.
   (2) The department shall submit claims for federal financial
participation for the expenditures for debt service that are
allowable expenditures under federal law.
   (3) The department shall, on an annual basis, submit any necessary
materials to the federal government to provide assurances that
claims for federal financial participation will include only those
expenditures that are allowable under federal law.
   (k) Supplemental reimbursement paid under this section shall not
duplicate any reimbursement received by an eligible facility pursuant
to this chapter for construction costs that would otherwise be
eligible for reimbursement under this section.  In no event shall the
total Medi-Cal reimbursement pursuant to this chapter to a facility
eligible under this section be less than what would have been paid
had this section not existed.
   (l) In the event there is a final judicial determination by any
court of appellate jurisdiction or a final determination by the
administrator of the federal Health Care Financing Administration
that the supplemental reimbursement provided in this section must be
made to any facility not described therein, this section shall become
immediately inoperative.
   (m) Any and all funds expended pursuant to this section shall be
subject to review and audit by the department.
